This report contains all of the report content that was sent out to Recon For Investors' subscribers, but some of the information included in this report makes reference to information that is specific to Special Reports that are not available on Apple Recon as we have not released them to the public.
When RFI is referring to the Special Reports, we are placing the information contained in this report in context, as well as using them as a short hand to discuss previously reported "Recon"
However, this should not prevent you from benefiting from the report's content. Enjoy.
"The One Man Powerhouse" Mr. Jobs is having the desires of his heart fulfilled. First, he clamps down on internal leaks, as well as setting traps for those who might dare leak information, and then he has leaked that there will be an Apple Media Event on 10 Nov 97 and then further allow other leaks to build the suspense; even if there will be leaks on or about 7 Nov 97 to further build the anticipation regarding the nature of the major news, announcements and developments.
Simultaneously, the Global "Cupertino Call" and campaign that was designed to all but coerce selected parties to travel from points all over the globe to be in attendance as Mr. Jobs drops at least one "Jaw Dropper" Bombshell to the world and the media, is being enacted ever so quietly with even Apple Computer's PR mill in the dark about its very existence. Message after message was sent to divers parties worldwide, since late October urging, no compelling them, to make certain that they were in Cupertino on 10 Nov 97.
This has not only built anticipation and buzz about this "Apple Event" but also lead to all manner of speculation about what would be announced on 10 Nov 97; as well as initiate speculation about what Mr. Jobs will do to top it at Macworld Expo San Francisco in January. Truth be told, Mr. Jobs, et al, need to build momentum between now and the shareholders meeting as those proxy statements are being prepared to be mailed out and most of the votes will have been completed and sent in by the time Mr. Jobs takes the dais at the Macworld Expo keynote. And no sooner than the proxy questions are filed and sent out, those questions will be known; if not sooner. Especially if a rumored Apple and Oracle merger is going to be one of the questions; which is remote.
So, Mr. Jobs has the desire of his heart; which is to rivet the world's and the markets attention on Cupertino between 7 - 10 Nov 97, as well as renewing a lot of interest in Apple and what it is doing going forward. His plan has been a success as RFI has been hit with numerous queries about what we know, when we knew it, and when we're going to tell it.
Yes, Mr. Jobs' plan has been a huge success but he has to provide steak for all that sizzle; and he's been working on "aging" that steak since Macworld Expo Boston and even before. Not everything that he is working on will be ready in time for 10 Nov 97 but at least one Bill Gates type of "Jaw Dropper" announcement will surely be made during that 2 1/2 hour Apple Media Event on Monday 10 Nov 97.
And yes, invitations are still going out and they are being followed up by e-mails to certain select parties, trying to ensure that the place is packed to the rafters as well as having others making sure that they are watching the globalcast at one or more of the locations around the globe.
Ever since RFI started giving markup warnings about this event between 7 - 10 Nov 97 (we were first, thank you very much) we've been holding our cards close to our vest as we didn't want the news to leak prematurely and then have its eventual impact on the markets lessened or even negated. We even consulted with a Trader (Capital "T") as to when we should time its release to RFI's subscribers. And, we've all but placed an embargo upon Apple Recon content in the intervening days and weeks.
Which brings us to the "Steak" for all our sizzle. What you have all been patiently waiting for; which we apologize for but some of RFI's Special Report content has been leaking out of our "ecosystem" into places where it should not be. Which is why we've been so cautious.
The Recon on Apple that follows is being presented as : "Recon, Rumors, Reports, etc." that RFI has received and we are not definitively stating that any or all of these might be part of the "Jaw Droppers" that Mr. Jobs is going to give. Take a look at what happened when RFI scooped the Jobs keynote content, etc. Mr. Jobs lopped off 15 minutes from his keynote at the last minute after having an emergency Board meeting the night before.
With that said. RFI will offer up those "Recon, Rumors and Reports" that we have either known for some months now, or has come into our possession over the past several weeks. Some of which is confirmation of things that RFI has known or suspected and things we even mentioned in RFI and on Apple Recon contemporaneous to the time when we learned of, heard or detected them.
So, RFI is going to give you a rundown of the Recon, Rumors and Reports we've received that appear to reveal some of the things Mr. Jobs is working on as "Jaw Droppers".
In July 97 when RFI and Apple Recon broke the news that something was going on with Apple and Microsoft and that we could expect "Fireworks" at Macworld Expo Boston, we also reported "The Tale of Two Suns" and that "The Second Sun" saw Rhapsody as the "real threat" and it was the "Clear and Present Danger" to not only Sun Microsystems but Microsoft as well. "The Second Sun" was all a twitter over the possibility that Microsoft might license QT 3.0 after Sun had dithered around regarding a QT 3.0 license and even rebuffed Apple's last offer before Macworld Expo.
Well, their fears resulted in something a lot worse than their own nightmares as Microsoft got the keys to the kingdom and entry was only a matter of price.
In the Post Macworld Expo Report, RFI opined about Microsoft's stance towards Rhapsody / Yellow Box, etc. and even reported that it wasn't out of the question that Microsoft might "endorse" / "embrace" Rhapsody / Yellow Box by way of licensing it for desktops and servers while slapping a Windows GUI on it. Yes folks, it's not "news" or hot off the presses.
Subsequent to Macworld Expo, Microsoft down played and even publicly denigrated Rhapsody, even prior to Macworld Expo they were doing this, and RFI rightly pointed out that this was a standard operating procedure for Microsoft to denigrate that which they feared while they figured out what the heck they were going to do with it. In fact, RFI continued reporting this fact at each and every step regarding Microsoft and Rhapsody / Yellow Box.
Two things might have tipped the scales in favor of Rhapsody / Yellow Box. First was the Rhapsody Developer Release shipping and the second was a news announcement that IBM, Oracle, Netscape and Sun were going to "develop" a standard desktop OS for deployment across the network as well as for all of those nifty little NC / Information Appliances. Upon reading the news release, RFI opined: "Read Rhapsody".
However, Microsoft embracing or licensing Rhapsody as a WinXX variant for its desktops and servers is an ace in the hole in case the Justice Department's case against Microsoft has any teeth in it.
But, that is not the only thing that Apple and Microsoft have in their stalls as far as further partnering goes. In fact, if one takes a closer look at the problems that Microsoft is having, one need only go back and read not only the "Post Macworld Expo" Special Report, but "The Brave New Apple", and "Serendipity Strikes and Fantasy Special Report" as well as the "Going Soft" Special Report that is publicly available on Apple Recon.
Going back to the previous reference to "The Second Sun", prior to Macworld Expo RFI was "pinged" (contacted) by those belonging to the "Second Sun" over the possibility of Microsoft licensing QT 3.0 as well as other involvement with Apple. After the "surprise" appearance of Mr. Gates at Mr. Jobs' Macworld Expo Boston keynote, those same members of "The Second Sun" contacted us and asked whether "$150 million would be the highest cost for a license of QT 3.0 by Sun..."
They weren't heartened by what we had to tell them regarding their licensing questions, especially in light of RFI's comments about Sun's fumbles in both RFI and on Apple Recon. However, RFI also saw the potential writing on the wall from these queries, as (allegedly) did Sun Microsystems. And, no one should have been really surprised at that joint announcement by IBM, Oracle, Sun, Netscape, et al, over that "common desktop OS" that specifically failed to mention the "who,what, where, when and how" other than to say that they were going to deploy such a system. FWIW, Rhapsody is "today" what JavaOS hopes to be. Just read that Fantasy part again.
"Rumor has it" that "Post Macworld Expo" that Sun and Apple have been holding talks with the potential and possible end result that Sun "coughs up a good chunk of change" ($100+ million has been bandied about) as an investment as well as access to technology / licenses (like the Microsoft deal) as well as the continued commitment by Apple to ensure that its Java implementations remain 100% Java cross-platform compliant. Last we heard, the jury is still out on this rumored deal, but apparently "The Second Sun Has Been Rising" since Macworld Expo Boston.
So far, there's not a heck of a lot of news in this report if you've been reading RFI for a while, is there? Of course not. A lot of this was first mentioned by RFI a long time ago but it is now some of the hottest speculation about what some of the "Big Events" will be at Apple's global media event.
You know RFI's position on the alleged and rumored Apple / Oracle Merger; as well as the fact that we believe that it will more than likely be a Strategic Partnership between the two as well as a potential tie in with Knowledge Universe. The "Serendipity" portion of that Special Report.
And, you've known the whys and wherefores regarding this almost inevitable linkage since at least July 97, and even before, so there's not a large need to go over all the details yet again.
While RFI does not discount the potential for a proposed merger between the two, RFI believes that its time has long since passed as there are other potentially more lucrative deals and other arrangements that would be of a better benefit to Apple.
Furthermore, RFI is still of the opinion that neither Mr. Jobs nor Mr. Ellison have the votes amongst the respective shareholders to pull the deal off. What is acceptable to Apple's shareholders would be unacceptable to Oracle's and vice versa.
And the recent reports that there are SEC filings on the desks at both Oracle and Apple doesn't really make a merger more credible as even if there was an "investment" in Apple by Oracle as part of a strategic partnership, those SEC filings would still have to be made. Those promulgating these assertions of a merger because of the alleged existence of SEC documents for filing don't know the markets very well.
Again, it's "old news" and any announcement by Apple and Oracle of any partnership / merger would not be a "Jaw Dropper" as just about everybody and their siblings have already heard about it or are expecting it. It's like Steve Jobs being named "Official CEO" rather than interim, a "yawner" as everybody expected the possibility.
Well, what follows isn't expected...
At the time of Apple "Ending Licensing As We Currently Know It", an IBM executive made some noises about how "bad" it would be but fell silent after Apple slapped IBM's comments down during the conference call regarding licensing. At the time, RFI commented on Apple's response to those IBM comments as well as IBM's subsequent silence. And, we also speculated "why" in one of those Special Reports; namely, that IBM felt that it might become irrelevant in certain areas due to Rhapsody / Yellow Box and the Microsoft deal that Apple had cemented. IBM saw a gun pointed to its head in certain areas and it might be best if it kept a low profile as far as Apple goes.
Then, when RFI published "CHiRP, CHiRP.." we were pinged by people at IBM regarding this phenomenon; which was later explained as to "How" it was possible. And, we were also "pinged" by people at IBM asking other specific queries on other things as well.
Well, apparently some of RFI's "speculation" has been borne out by subsequent events as RFI has heard that Mr. Jobs and IBM Chairman Gerstner have been having one-on-one talks for more than the past several weeks and it wasn't about whether IBM was going to make those 1 GHz PowerPC chips available to Apple.
Can someone say: "Serendipity Strikes & Fantasy Special Report?" Great! While we were not a third person on the line during these alleged talks, RFI has heard that some of the points being discussed was the potential for IBM to OEM Rhapsody servers, etc., both PowerPC and X86 based in order to counter any potential erosion from increased sales of WinNT servers that could hammer a lot of IBM's Enterprise Division sales. While this is "rumored", it's a good fit as far as the potential content of those talks goes and even makes a heck of a lot of sense.
Furthermore, any potential deal will probably eventually cover the entire spectrum of the Fantasy section of the Special Report. However, the key aspect is that Mr. Jobs and Mr. Gerstner have been having one-on-one talks and it wasn't about coordinating what they were going to wear at the State Dinner at the White House.
Currently, IBM is one of the front runners for licensing Rhapsody on Intel, or even Rhapsody on PowerPC, but at Apple's terms and not from a standpoint of having a gun pointed to its head.
Apple has always been extremely careful to state that they were not going to be making X86 based Rhapsody boxes; which leaves a hole wide enough for a16 lane Super highway to be laid down.
Well, beside the IBM "rumors", RFI has also heard that Compaq (CPQ.N) might be a potential X86 Rhapsody OEM for servers and desktops as well as other aspects of the Fantasy scenario.
RFI had also previously heard, and reported, rumors regarding Gateway 2000 (GTW.N) as far back as Feb / Mar 96; as well as the alleged rumors where Apple might engineer a merger / acquisition of Gateway; which RFI discounted and still does.
Of course there are other potential WinTel cloners that might be players in any MacTel / Rhapsody on Intel play (see "Sleeping With The Enemy" Parts I and II, MacTel boxes, etc.), but as far as IBM and Compaq goes, they fit the bill quite nicely and are our personal favorites. Dell? Dark horse candidate. Really dark.
Yet another potential "Jaw Dropper" if Mr. Jobs has Mr. Grove appear at the Apple Media Event where he not only officially announces "Rhapsody on Intel" but also revealing Apple's intention to port Rhapsody to Merced as well as Intel's Alpha chip if the Intel and Digital deal passes muster with the courts and the federal government.
First Bill, then Andy. And maybe Lou too.
This is not as outlandish as it may seem or you might think; especially in light of Intel's deal with Digital. This would basically make Apple a true cross-platform environment where Apple finally fulfills its "CHRP Stated Goal": To make it a matter of preference rather than default. Again, something that RFI has covered in depth and detail for a long time running now.
And while this might be cause for more than a little consternation amongst the Mac Faithful, it's fulfilling a lot of what RFI has been reporting and positing for a long time now.
Again, this channel changing and strategy changing is something that has been rife with speculation, but it is also something RFI reported on as soon as the marketing survey for Apple Club was presented to the Internet; that Apple was moving towards a direct selling model and that it would also be doing other things in order to make it easier for people to obtain the Mac products that they want in the configuration that they want. Simple as that. That it might also cause dyspepsia amongst the Mac Faithful and certain areas of the Mac Market goes without saying. Remember the brouhaha that RFI caused when we reported on the Whys and Wherefores regarding the details behind the scenes with Educational Access and PowerComputing? Well, a lot of people had hissy fits over that one too.
Yes, there are going to be announcements regarding Apple's channel strategies, more than what was discussed at the 27 Sep 97 meeting in Cupertino with the dealers, etc., but that could only be expected as Apple was pretty forthcoming with them regarding future moves.
And, this is one area where RFI has only heard what we have previously reported on. But, there are going to be some attention grabbing changes and announcements in this area. The CompUSA "Salon Stores" were only the beginning.
A lot of people, RFI and Apple Recon included, have long opined that Apple needed to stop preaching to the choir and needed to speak to the general consumer and media markets. Seeing ads in Mac Centric publications was great, but who amongst the non Mac Market was actually seeing them? That was the great critique of Apple's advertising and marketing.
And even with the advent of the "Think Different" campaign, that was actually telegraphed by Mr. Jobs at the Macworld Expo Boston keynote, people were still scratching their heads about Apple's efforts at keying the mass consumer and general media markets.
Well, people should be careful what they wish for, they just might get it. RFI has heard that Apple is "reallocating advertising resources" to target those mass consumer markets in order to build its Brand Image as part of "The Brave New Apple". In fact, they are so busy reallocating resources that the Mac Market might just see a dearth of Apple advertising in the exact same places that those who were criticizing Apple's advertising and marketing efforts in the coming months.
And, RFI is certain that the dearth of advertising in Mac Centric publications, as well as a declining co-op pie, will make those same people who were criticizing Apple's previous efforts criticize "Apple's ignoring of its Key Markets..." You heard it here first folks, so you might as well mark our words.
While RFI acknowledges that Apple's reallocation of resources will have some effect on the Mac Centric publication markets, as well as the catalogers, etc., who rely on those co-op funds, Apple's alleged strategy does have a method to its madness and part of it will be kicked off on 10 Nov 97.
You see, if (and we stress if) all that RFI has been positing, reporting, analyzing and speculating about Apple's strategy going forward is correct, then Apple really needs to gain awareness of its new focus, momentum and strategy with not only the general consumer market but the markets who would never see an Apple ad in a Mac Centric publication or catalog.
As an example, the deal with CompUSA for "Salon Stores" within CompUSA stores is a part of that marketing strategy as well as a way to fundamentally change Apple's distribution and sales to its "core markets". And, if it is successful for CompUSA, then others will want to follow suit. Especially if CompUSA can entice Mac users who normally buy their boxes via mail order from a catalog (or via the Web) to order custom configurations from CompUSA, or Apple, via the Web or walk-in (at a competitive price) then it will be a success for Apple.
Furthermore, if the mass market is aware of all the new offerings, especially businesses, by targeted advertising and marketing in mass media market publications, than increased sales of Macs will also eventually benefit those Mac Centric publications and others that might feel some short term pain.
It's not that "bad" really, if one takes a look at it in context; although RFI is certain that those affected by this alleged move will have more than a few words to say to us about it.
So, in the coming months, when some might start complaining about "Apple ignoring its key markets" because of this decreased Apple advertising and co-op funds, remind them that they should have been more careful for what they wished for because they got it. Their main problem is that it didn't come in the manner in which they expected.
Bottom Line on this? It might not be as bad as some expect or fear as there have been indications of late that Apple is moderating its "reallocation of resources", and it's also rumored that it came straight from Mr. Jobs. We'll have to see.
We guess we probably "Saved the Best For Last" in this Recon on Apple, as the item that follows below is something that RFI has been mulling over for the past several months. At this point in time, we're calling it rampant speculation and won't even go past the point of fleshing it out; although we've bounced the ideas off of some people and discussed some of the aspects and scenarios with them.
So, without further ado......
You heard us right. The headline got it all. If some of the information, Recon and analysis that we've conducted since before Macworld Expo Boston is correct; although it's sheer speculation at this point in time, both Apple Computer the company and Apple Computer (AAPL.O) the stock might be totally unrecognizable as it is currently known within the next 6 - 12 months; and possibly sooner.
While a sale, merger or acquisition is never totally out of the question RFI is thinking along different lines. While discussing some of the potential scenarios for Apple going forward, there are always more ideas being presented than can be digested in one sitting. Most people, including Mr. Carlton, are of the opinion that either Mr. Jobs or the New Permanent CEO will be dressing up the company for sale and that Apple will finally disappear.
FWIW, Apple has had plenty of opportunities to sell itself out and if the price were right the majority of the shareholders would have voted for the sale. Mr. McNealy's big mistake in 95 was that he tried a takeunder rather than locking in an offer that the Board could have taken to the shareholders.
But, as of today, the inherent potential in Apple would make any such sale of the company mighty hard to sell Apple's current shareholders on. Even the rumored Apple / Oracle merger is too hard a sale; as RFI has repeatedly mentioned.
No, RFI is referring to something else entirely.
First, Mr. Jobs and the Board appear to be considering "Radical Surgery" on portions of Apple that is not "Yet Another Restructuring" but a fundamental change in Apple's structure and focus. It is RFI's opinion that these changes will more than likely be started or announced on 10 Nov 97, and should be mostly complete by the time Rhapsody's Premiere Release ships in July 97. In fact, a lot of Mr. Jobs' "content" for 10 Nov 97 will be the ground breaking and initial paving of the way for Apple to meet Rhapsody's Premiere Release on a well groomed track so it has the best chance of doing what they desire it to do.
Secondly. If you have read all of RFI's Special Reports over the past several months, or even just the past year, you will realize that the future of computing is the "Mobile & Distributed Computing Environment". Rhapsody is a key to this future as it addresses most of the concerns that a lot of people have about this movement.
Which brings us to the point that people really do want choice in their environments and they do not want to be locked into one situation by default. If you don't believe us, then look at the Going Soft Report where IS/IT pros were stating their resistance to things Microsoft and WinNT 5.0 in particular.
With that previously mentioned announcement by: IBM, Sun, Oracle, Netscape, etc. about that common cross-platform desktop OS, RFI chuckled that they were describing Rhapsody and just about everything that RFI described in that Fantasy Section. We thought it a little premature, but the release was only an announcement of their intentions.
It is possible, although RFI has nothing to definitively support this stance that Apple Computer might see itself melded into a "consortium" that will actually throw open the computing environment while also having the preferred position of having Microsoft "join" the "Anybody / Everybody But Microsoft" consortium through its investment in Apple Computer. Rather than closing off the market, it would actually have the direct result in throwing open the computing market which might cause the federal government to have dyspepsia as they probably wouldn't really understand what was happening.
But, the above scenario would have to be jump a lot of hurdles as well as making sure that it could withstand the scrutiny of not only the federal government but every other mother's child in God's creation. That such a move would be highly profitable for all who are concerned and involved goes without saying. Making certain that Apple's long suffering shareholders derive benefit from such a move would also be a heavy sticking point.
What RFI is trying to prepare you for is that there might be severe paradigm shifts regarding Apple Computer going forward and these changes might wind up totally changing Apple (for the better in our opinion) so it would be unrecognizable if compared to its current incarnation even as late of 09 Nov 97.
That the changes that RFI has speculated about in this item will be the ones that might come to pass, RFI is dismissing as it would take too much maneuvering to complete in so short a time.
However, there have been indications that major paradigm shifts (above and beyond even the most fanciful speculation of anyone) might just come to pass where people won't "recognize" Apple in a scant 6 - 12 months.
But, RFI does hope that AAPL.O. the stock, does remain around; not out of self-interest for Apple Recon but for the simple fact that we've been able to make people a lot of money from trading not only the stock but the options from it; even as others have dismissed AAPL.O "Because it was dying".
While RFI believes that over the past year especially over the past eleven months, we've been able to point you in the right direction as far what might be in store for 10 Nov 97; we've also been able to give you "exclusive Recon" over what has been occurring recently that might be part and parcel of Mr. Jobs' and Apple's "Apple Event" on 10 Nov 97.
Furthermore, the puzzle pieces are fitting together and are starting to elaborate a clearer picture as to where Apple is most likely heading going forward. That RFI had discussed a lot of these things in previous Updates and Special Reports should not come as a let down.
And while RFI would love to tell you that we're in possession of Mr. Jobs' script for 10 Nov 97, we can't. All we can do is put forth the puzzle pieces we have gathered as well as offer our take on them.
Lastly, even as we hinted at things to come we did our level best to warn those that were "flat" and even those "short" Apple (AAPL.O) that this was not a place that they should be.
Whatever the "Jaw Droppers" that Mr. Jobs and Apple decides to drop next Monday, they will be positive for AAPL.O and might leave a lot of people who were short or flat, bruised and/or regretful. This much RFI has known all along: "It's good for Apple the stock", which is RFI's primary concern. And is yours as well.
Enough said.
RFI has to leave some things out of this report as we could not confirm or even start to verify some of the "Late Recon" we've received, but if we can do so prior to Monday we'll include it in an RFI Update.
Also, this report will be placed on Apple Recon "sometime after the markets close on Friday" because by then it will be too late to act upon prior to Monday's opening bell. We wanted to give you fair warning.
Good Hunting!